The EAT dismissed the appeal, rejecting the appellants’ interpretation and ruling the contractual cap unenforceable due to statutory restrictions on waiving employment rights.

Vladislav Zabelin, the claimant, was an employee of SPI Spirits (UK) Limited, the first respondent. He was dismissed by Yuri Shefler, the second respondent and the first respondent’s agent, after making protected disclosures about pay cuts and alleged misuse of the COVID-19 pandemic for company profit.

By a reserved decision on liability sent to the parties on 1 December 2021, the tribunal found that 1) The claimant was unfairly dismissed by the 1st respondent contrary to section 98(4) of the Employment Rights Act 1996, 2) The principal reason for the claimant’s disclosure was that he had made protected disclosures. His dismissal by the 1st respondent was therefore automatically unfair, 3) Because he made protected disclosures, the claimant was subjected to a detriment by the 1st respondent, ie the 2nd respondent’s conduct on 8 June 2020, 4) The claimant was subjected to the following detriments by the 2nd respondent because he made protected disclosures: a) The 2nd respondent’s conduct on 8 June 2020, b) His dismissal.

The award against the 1st and 2nd respondents, jointly and severally, for whistleblowing detriments was £1,626,452.07. The award against the 1st respondent for automatic unfair dismissal was £3,589.09 (total £1,630,041.16 less the £1,626,452.07 for financial loss arising from the detriments). The damages included an Acas uplift of over £150,000 before grossing up for tax. The 2nd respondent was ordered to pay the claimant £3000 costs.

Before the ET at the remedy hearing, the Respondents relied upon contractual clauses which, they contended, had the effect of limiting the amount of compensation that the claimant might receive upon dismissal to £270,000 net. While it was accepted that such clauses could not impose a legally-effective cap on the tribunal’s awards, it was contended that they had been freely negotiated, and were a relevant circumstance to be taken into account when deciding what amount of compensation it was just and equitable to award. In its subsequent remedy decision the ET made joint and several awards of compensation for detriment against both Respondents, as well as a further award against the first Respondent for unfair dismissal. The ET also uplifted its awards of compensation on the basis of failure by the first Respondent to follow the ACAS Code on Disciplinary and Grievance Procedures (2015).

The Respondent appealed the decision on the following grounds:

• The ET erred in law in its application of s 123 of the ERA, and specifically its approach to determining the amount of compensatory award made to the Claimant given his contractual agreement that on termination he should be entitled to the net amount of £270,000 but no more. 
   
  
• The ET erred in law by making an uplift under S 207A(1) of the TULRCA in circumstances which the Claimant had not raised a written grievance about the issues which were the subject matter of his protected disclosure.
   
  
• The ET erred in law in accepting that the uplift applies so as to allow an increase in the level of award made against an individual respondent.
   
  
• The ET erred in law in failing to address the legal basis for the claim against Mr Schefler

The EAT dismissed the appeal. The EAT did not accept the appellants’ interpretation of the agreement, but in any event found that the tribunal’s refusal to apply the cap was correct, in light of the statutory restrictions on contracting out employment rights ie it was an unenforceable contractual cap.

With regard to the uplift, it was correct that, for the grievance provisions of the Code to be engaged, a grievance needed to be put in writing. The Cadogan Hotel Partners Ltd v Ozog, UKEAT/0001/14, 15 May 2014 followed. But the tribunal was not in error in rejecting the contention that the procedure did not apply in this case on the basis that, when the written grievance was first raised, the Claimant had yet to raise it in circumstances that gave it the character of a protected disclosure and only did so subsequently orally. The ET was entitled to conclude that the underlying matter remained the same. The power to award an uplift in any event arose on the basis that the discipline provisions of the Code applied in respect of the subject matter of the detriment and unfair-dismissal complaints. Where the employer dismisses or takes other action against an employee because, in substance, of what it regards as, or potentially as, culpable conduct, the discipline provisions of the Code will apply.

The ET also did not err in applying the uplift to the award against the individual agent as well as those against the corporate employer, in circumstances where it had found that the individual concerned was responsible for the employer’s failure to comply with the Code.

For practitioners, the aspect of greater interest is likely to be the EAT's decision not to follow Ikejiaku in relation to the application of the Acas Code to a dismissal on the ground of a protected disclosure. This was on the basis that, on the facts of this case, the making of the protected disclosures amounted to alleged culpable conduct for which the employee was dismissed, but no procedure was followed. Key to engaging the disciplinary provisions of the Acas Code is whether the action is being taken by the employer because of alleged culpable conduct by the employee as opposed to the subsequent classification of that conduct from an employment law perspective.

An appeal was scheduled to be heard in April 2025. A further case review will be provided in due course.

You can read the case in full here.